What to do when your credit card charge is denied

Considering how often Marjorie Asturias’s credit card charges have been denied recently, you’d think she was a notorious scammer, or an international art thief.

“We have plenty of credit on the card, and faithfully pay our balance in full each month,” says Asturias, 40, a Dallas, Texas resident with a penchant for books, gardening and her three dogs. “But suddenly, we’re getting a number of charges denied, sometimes while we’re standing at the register.”

“Before, this happened only a handful of times in the 10-plus years we’ve had the card,” says Astorias, who is president of digital marketer, Blue Volcano Media.

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Asturias isn’t alone in feeling singled out by her bank for credit-card charge rejection. But it’s not malicious; financial institutions are feeling the pressure of keeping up with armies of hackers who steal personal information, swipe card numbers and load those accounts with false charges.

Total global fraud losses from credit and debit cards amounted to $7.6 billion in 2010, up 10 percent over the previous year, according to trade publication The Nilson Report. Of that, 47 percent was in the United States.

Data on the precise number of charge denials isn’t publicly available, as the banks consider it proprietary information.

And credit card companies like Visa say authorization decisions are made by the issuing bank, not them.

Industry experts confirm that consumers are dealing with an increasing volume of denied transactions, and having to prove they are who they say they are.

“Banks have seen an uptick in fraud the last couple of months, and they’re trying to protect themselves,” says Avivah Litan, a security analyst with technology research firm Gartner. “They put in blunt new rules to stop fraud, because their predictive models aren’t keeping up. As a result they’re creating a lot of false positives – and end up inconveniencing a lot of good customers.”

BREACHES GALORE

Financial institutions say they have little choice but to clamp down, when security breaches are coming fast and furious.

In 2008, another processor, Heartland Payment Systems Inc., suffered a breach that hit 130 million accounts. And companies ranging from online shoe and apparel retailer Zappos to Sony Corp. to discount retailer TJX Companies Inc. have all been affected by security breaches.

In response, card issuers scramble to figure out which charges are legitimate. Unusually large purchases, or those from new locations or an unfamiliar computer, can raise red flags.

“We have to strike a balance between customer convenience and fraud prevention. And when there have been third-party security breaches, that clearly raises the bar for us,” says Doug Johnson, a vice president of risk management policy at the American Bankers Association.

That’s how the battle against fraud affects regular folks – like Marcia Noyes.

“I live in Colorado, my kids go to school in Oregon, and often, my husband uses the same account while traveling,” says Noyes, 51, a marketing director for a healthcare technology company.

“The card company can’t seem to differentiate when different cards are used in different states by different people,” she says. “When my kids use their cards, it can cause real problems. It’s frustrating.”

Even Noyes’ grocery and gas purchases have been turned down, as she appeared to be in three places at once. So, what’s a frustrated consumer to do?